Biz climate improves in May; growth likely to be at 5.3%

Business climate in the country improved last month buoyed by rising output of intermediate goods as well as tourist earnings and the government's reform initiatives, according to a report.

The 'BluFin Business Cycle Indicator', which reflects various macroeconomic trends on a monthly basis, stood at 166.3 points in May, 5.8 per cent higher compared to the same month last year, suggesting that the Indian economy is growing at a faster rate than the previous year.

The year-on-year growth rate noted in the previous month was at 5.1 per cent.

Historically, the BCI has grown by an average of seven per cent year-on-year, financial information provider BluFin said on Tuesday.

Moreover, BCI has been indicating a reversal in the economic slowdown since July 2012 and expects that Indian economy would grow at 5.3 per cent in the first quarter of financial year 2013-14.

"The growth has been aided by improved production of intermediate commodities like pig iron and aluminium, rising

It further said that government has been instrumental in boosting infrastructure investments, generating a consistent improvement in the production of intermediate commodities such as pig iron and aluminium, along with prudent management of non-plan expenditures.

"Also, timely regulatory reforms are ensuring a steady increase in foreign direct investment in the country," it added.

However, foreign exchange and international trade continue to be a concern despite a slowdown in gold and oil prices and a decline in domestic inflation.

A surge in domestic gold demand is hindering effective management of the Current Account Deficit.

"The continued uptrend in the BCI is consistent with the just released GDP numbers.